New Income Tax Bill: Several important income tax amendments have been made in Budget 2025 for the financial year 2025-26 (assessment year 2026-27). These changes have been implemented with the aim of simplifying the tax structure for the taxpayer and making tax compliance easier. It is necessary to do tax planning keeping these changes in mind. So let us know these changes in detail and in easy language.

New Income Tax Slabs (for FY 2025-26)

New tax slabs have been proposed in Budget 2025 under Section 115BAC. These slabs will be applicable under the new tax regime (default tax regime).

0 – 4 Lakh Nil
4 Lakh – 8 Lakh 5%
8 Lakh – 12 Lakh 10%
12 Lakh – 16 Lakh 15%
16 lakh – 20 lakh 20%
20 lakh – 24 lakh 25%
Above 24 lakh 30%

Increase in tax exemption under section 87A

Under the new tax system, the rebate limit has been increased from ₹25,000 to ₹60,000.

Now there will be no tax on income up to Rs 12 lakh.

The exemption limit in the old tax regime will remain at ₹12,500

Changes in Tax Deducted at Source (TDS)

The new limit for TDS from 1 April 2025 will be as follows

Section Earlier limit (₹) New limit (₹)
193 (Interest on securities) NIL 10,000
194A (Other interest income) 50,000 (for senior citizens) 1,00,000 (for senior citizens)
194B (Lottery winnings) 10,000 (Annual) 10,000 (On each transaction)
194-I (Rent) 2,40,000 (Annual) 50,000 (Monthly)
194J (Fees for professional services) 30,000 50,000

Changes in Tax Collection at Source (TCS)

Section Previous limit (₹) New limit (₹)
206C(1G) (Remittance under LRS) 7 lakh 10 lakh
206C(1H) (Purchase of goods) Rs 50 lakh will not be applicable (exemption)
Time limit for filing updated tax return (ITR-U) extended
Now the time limit for filing updated tax return has been extended from 12 months to 48 months (4 years).

date for tax exemption

The last date for tax exemption for FSC units has been extended to March 31, 2030, which will provide long-term benefits to investors and businesses. There will be no tax on life insurance policies purchased by foreign investors from IFSC, which will promote international investment. Apart from this, relief has also been given to startups, where startups registered till April 1, 2030 under Section 80-IAC will be given 100% tax exemption for 3 years out of the first 10 years.

Sections 206AB and 206CCA have been removed to simplify the tax system, which will reduce the complexities of TDS and TCS. The limit of remuneration deduction for partners has also been increased, where a maximum deduction of ₹3,00,000 or 90% (whichever is higher) of book profit up to ₹6,00,000 and 60% if it exceeds ₹6,00,000 will be allowed.

Additionally, those Unit Linked Insurance Plans (ULIPs) whose annual premium exceeds ₹2.5 lakh, their income will be taxable under capital gains tax. Relief has also been given in respect of self-occupied properties, now their number will not be limited to two and even if the owner is unable to live there due to any reason, it will be considered as zero income.